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Issues:
1. Validity of assessment under section 143(3) read with section 147(a) of the Income-tax Act, 1961 for the assessment year 1959-60 in the case of Smt. Kailasa Devi. 2. Legality of assessment under section 143(3) read with section 147(a) of the Income-tax Act, 1961 for the assessment year 1959-60 in the case of Smt. Rukmini Bai due to delayed notice service. Analysis: 1. The High Court of Andhra Pradesh addressed two references concerning the validity of assessments under section 143(3) read with section 147(a) of the Income-tax Act, 1961 for the assessment year 1959-60. In the first reference (R.C. No. 53/1973), the issue was whether the assessment on Smt. Kailasa Devi was legal and valid. The Tribunal found that the notice under section 148 of the Act was not served within the prescribed period, leading to the conclusion that no valid proceedings were initiated under section 147. The Court agreed that both issuing and serving the notice within the specified timeframe were essential for commencing proceedings under section 147. 2. In the second reference (R.C. No. 54/1973) regarding the assessment on Smt. Rukmini Bai, the notice under section 148 was issued but not served within the stipulated period. The Tribunal similarly held that the assessment was not valid in law as it did not meet the requirements of sections 149 and 151(2) of the Act. The Court reiterated that serving the notice within the prescribed period was crucial for initiating valid proceedings under section 147. 3. The Court examined the contentions raised by the department's counsel, emphasizing the interpretation of the terms "issue" and "serve" in the context of initiating proceedings under section 147. The counsel argued that once the Income-tax Officer decided to commence proceedings and signed the order, it constituted issuing the notice, even if not served immediately. However, the Court disagreed, stating that such an interpretation would allow indefinite delays in serving notices, contrary to the legislative intent behind the Act. 4. Referring to previous judgments, including the Supreme Court's decision in Banarsi Debi v. Income-tax Officer, the Court highlighted the importance of timely issuance and service of notices for maintaining the validity of assessments. The Court concurred with the interpretation that "issue" and "serve" were interchangeable terms, underscoring the necessity of adhering to the prescribed timelines for notices under sections 148 and 149 of the Act. 5. Ultimately, the Court ruled in favor of the assessee in both references, emphasizing that the failure to serve notices within the specified period rendered the proceedings initiated by the Income-tax Officer without jurisdiction. The Court cited precedents to support its decision and awarded costs to the assessee. The judgment underscored the significance of strict adherence to procedural requirements in tax assessments to ensure the legality and validity of the proceedings.
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